Strong growth in trade between the U.S. Gulf region and the Caribbean, Central and South America is more than making up for weakening volumes to and from recession-battered Europe.
“Everybody keeps talking about the Panama Canal expansion and the growth of Asian cargo, but I’ve always said our bread and butter is down south,” said Gary LaGrange, president and CEO of the Port of New Orleans, where the Latin American and Caribbean trade accounts for 60 to 65 percent of the port’s throughput.
At Houston, 300 miles to the west, trade volumes with Europe and the Mediterranean, still the port’s largest overseas trade markets, are down 1 to 2 percent this year, while the north-south trade is showing solid growth.
“The fiasco in Europe is starting to have a little bit of an impact on our container numbers,” said Col. Len Waterworth, who was appointed permanent executive director of the Port of Houston Authority on April 24. The port’s north-south trade, its second-largest market, grew 5 percent in 2011. “That trend most likely will continue,” he said.
The Gulf Coast’s major container ports are by no means turning their backs on the European or Asian trades. Houston, Mobile, Tampa and New Orleans are pressing ahead with port and intermodal rail expansion plans designed to handle the growing volumes they anticipate after the Panama Canal completes its expansion. But those ports’ chief executives are seeing more growth in trades to the south, rather than the east or west.
“Tampa will become the gateway to the central Florida market for the north-south trade,” said Richard Wainio, director and chief executive of the Tampa Port Authority, who recently announced he would leave his post in September.
When the new on-dock intermodal rail terminal at the port’s Hooker Point container terminal is completed this fall, Wainio said Tampa also could become a gateway for container trade with all points in the Southeast served by CSX Transportation, which is sharing the cost of the $11 million terminal with the port. “It will be the only on-dock rail terminal with 100-car unit train capabilities in the state of Florida,” Wainio said.
Tampa’s other big infrastructure project, the I-4 Expressway Connector, is more than half finished. When completed by the end of 2013, the flyover will enable trucks to drive from the port directly onto Interstate 4, where they can deliver containers to distribution centers operated by the likes of Publix and Rooms to Go, which are being expanded. Coca Cola is spending $99 million to expand its juice processing plant in Auburndale and is one of several major juice processors in the region that ship juice in both directions through the port in bulk and containers, including imports from Brazil and Costa Rica and exports to China.
While the port’s container total container volumes dropped by 9 percent to 40,000 20-foot-equivalent units last year, this was mostly because it handled fewer empty containers. The tonnage of products in containers handled by the Ports America terminal actually increased by 2 percent year-over-year from 2010; it increased 20 percent year-over-year in the six months ended March 30, 2012.
Wainio is bullish on Tampa’s future because of the Central Florida consumer market, which, with a population of 8 million in the Tampa Bay and Orlando region, is the fastest-growing region in the state and draws 50 million tourists a year. With a total population of 20 million, Florida’s growth has resumed after the 2008 housing crash and is on track to displace New York by the end of 2013 as the third-largest U.S. state after California and Texas.
Houston, by far the largest container port in the Gulf, is benefiting from explosive growth in exports of its petrochemical products, drilling and refinery equipment to South America, the Middle East and West Africa. “It’s boom time all over again,” Waterworth said, predicting the U.S. will become a net energy exporter by 2020. He said the boom in energy-related exports in containers, bulk and breakbulk in the north-south trade is more than offsetting any weakness in the European trade.
Houston’s top South American trading partners are Brazil, Colombia and Chile. Three container lines — Hamburg Sud, Hapag-Lloyd and Mediterranean Shipping Co. — serve the Brazilian trade, with Zim Integrated Shipping Services buying slots on the MSC run. Exports account for 65 percent of the trade, consisting of plastic resins, cotton, synthetic rubber, chemicals, oil well equipment and forest products. Granite and other ornamental stones, ceramic proppants for oil and gas, lumber and wood products and coffee are the major import commodities arriving from Brazil.
Volume through Houston’s two container terminals, Bayport and Barbour’s Cut, increased 3 percent last year to a record of just under 1.9 million TEUs. With plans to expand the terminals, the port is awaiting permits from the Army Corps of Engineers to deepen the channels that lead to the facilities to 45 feet from 40 feet now. The port authority would pay for the deepening itself, at a cost of $130 million.
“We can’t wait on the feds, so we are putting our dollars into deepening the channel to meet market demand when the Panama Canal expands,” Waterworth said. He expects to complete the project by the end of 2014, before the opening of the new locks at the Panama Canal. The Houston Ship Channel is already 45 feet deep.
The port authority will build out the remaining half of the planned expansion of Bayport over the next five to seven years. Bayport currently has annual container capacity of 1.1 million to 1.2 million TEUs. The original design for the completed project was to double that capacity to 2.4 million TEUs, but the port plans to be able to raise that to 3 million TEUs by continuing “densification.”
The next step at Bayport is building a permanent gating system that would include an overpass and underpass road. The port is working on flyover entrances into Bayport so trucks would be able to come straight off I-146 into a two-mile, four-lane access road that eventually would have six lanes leading into the new gates. “They are under construction and should be done by early fall,” Waterworth said.
The port authority is refurbishing the Barbour’s Cut terminal, which is close to 40 years old. “It has to be recapitalized to meet changing market demand,” Waterworth said. Plans include replacing the four 50-foot-gauge cranes with 100-foot-gauge cranes that could accommodate the larger ships that will come through the expanded Panama Canal. Waterworth has set a target to have at least one wharf fully operational by the fall of 2014.
The Gulf’s second-largest container port, the Port of New Orleans, is expanding its container facilities to handle the growth in its north-south trade, which is driven by demand for U.S. exports. The port handled 474,000 TEUs last year, up 14 percent over 2010. “Based on the first quarter, we should go over 600,000 TEUs this year,” LaGrange said. Container throughput already has exceeded pre-recession levels. The port handled 270,000 TEUs in 2009. “We’ve more than doubled since then,” LaGrange said.
MSC has taken more than half of the Napoleon Avenue Container Terminal in a venture with Ceres Terminals. “We can’t seem to find enough space for them, so they have a constant request for more space,” LaGrange said. The port recently completed expansion of the terminal to an annual capacity of 650,000 TEUs and will expand it further in the next year to 800,000 TEUs under Napoleon Phase 2. When it moves into Phase 3, annual capacity will increase to 1.3 million TEUs.
The port is paving the entire storage yard around the terminal with 18 inches of concrete in anticipation of the expansion of containerization, which will allow six-high stacking of containers. “We are doing this in anticipation of the expansion of containerization as more and more breakbulk cargo moves into containers,” LaGrange said.
The port is investing $5 million to $8 million to build an on-dock intermodal rail terminal next to the Napoleon Avenue terminal, with the help of a $17 million TIGER grant received in December. Once the $26 million project is complete, the port expects a container volume through the terminal to soar from 25,000 TEUs to more than 120,000 TEUs.
LaGrange said the grant has opened up the possibility of doubling the size of the planned project in a public-private partnership between the port and Canadian National Railway, which will be the primary user of the rail ramp, although it is open to all seven Class 1 railroads.
The Port of Mobile, whose container throughput grew 30 percent last year to 169,282 TEUs, is in the middle of Phase 2 of the expansion of its 3-year-old APM Terminals Mobile. It is spending $30 million to expand its container yard by an additional 45 acres, which would increase its size to 135 acres.
Phase 2 will expand capacity from the 300,000 to 350,000 TEUs now to 600,000 over the next couple of years, depending on demand, which is “growing at a good pace this year,” said Jimmy Lyons, director and CEO of the Alabama State Port Authority.
He said the port is beginning the planning process for Phase 3, which would involve densification of the terminals by shifting from reach-stacker cranes to rubber-tire and rail-mounted gantry cranes.
Mobile’s growth is coming largely from its Asian services. China Shipping and CMA CGM restructured their joint PEX service, ships of which used to call at Mobile and then at several ports on the East Coast before sailing through the Suez Canal back to Asia. The two carriers changed the rotation to Mobile, Miami, Jacksonville and then back to Asia through the Panama Canal, “so we pick up better transit time back to Asia than via the Suez route,” Lyons said. “China Shipping is buying slots on that, so we’ll have more slots available on the ship to the ports they’re calling in the U.S. and have a second carrier selling those slots.”
The Port of Mobile got its first call by a post-Panamax container ship on June 3 when the MSC Laura docked at APM Terminals Mobile. It was the first ship on MSC’s new weekly direct service from the North European ports of Antwerp, Felixstowe, Bremerhaven and Le Havre to Mobile.
Lyons expects the port’s container volumes to get a boost from the completion of a third cold-rolling mill at ThyssenKrupp’s stainless steel plant north of the port, which is being acquired by the Finnish stainless steel-maker Outokumpu. The plant imports nickel and ferrochrome alloys in containers from all over the world. “We’ve had a visit from one company that will supply 500 FEUs a year coming out of the South Pacific via a transshipment hub,” Lyons said.
Mobile’s north-south trade also is increasing, with imports and exports in balance. All of that trade is relayed through transshipment hubs in the Caribbean. Lyons expects the trade to grow as new wood pulp manufacturing capacity comes on line in Brazil and Uruguay. “We’re looking at what we can do to expand our warehouse capacity to handle the increase in wood pulp and the increases we expect in steel exports,” he said.
Container throughput increased 3.6 percent to 216,000 TEUs last year at Gulfport, Miss. The port is in the midst of a $570 million reconstruction and reclamation project aimed at restoring the 90 percent of the port wiped clean by Hurricane Katrina in 2005 and also expanding the port’s area by about 50 percent.
The Port of Freeport, Texas, also is considering expansion. The Army Corps of Engineers is conducting a feasibility study — cost-shared 50-50 by the port and the Army Corps of Engineers — on deepening its harbor channel to 55 feet from 45 feet, and widening it from 400 feet to 600 feet. The port’s container throughput dropped 6.7 percent to 67,310 TEUs in fiscal 2011, which ended Sept. 30.